Energy efficiency investments
and employment objectives
Building retrofitting programs in
Europe
11/25/2013
European Trade Union Institute
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Peter J Glynn
• Background
• Australia
• Labour relations
• Labour law
• Geneva
• International Labour Organisation
• Present
• Brussels
• European Partners for the Environment
• Vanuatu and PNG
• Employment creation for nationals
• Research, Bond University
• Employment and workplace impacts of climate change policy; the role of employers
organisations and trade unions
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Presentation outline
1. Investment in energy efficiency
2. Employment created by investments in energy efficiency retrofits
3. Labour market considerations
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Section 1: Investment in energy efficiency
• Energy efficiency ranks at the lower end of sustainable energy invest
opportunities
• Energy efficiency could deliver 33% of GHG emission reductions
• EU 20: 20: 20 climate and energy package (2007). Member states to:
• Reduce emissions 20% below 1990 levels
• 20% of energy to come from renewable sources
• 20% reduction in energy production to come from energy efficiency
measures
By 2020
• EU energy efficiency action plan includes sectoral and energy performance
requirements for a wide range of products, buildings and services and a
comprehensive framework of directives and regulations.
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Financing energy efficiency investment
• EU has comprehensive policy framework
• more than 100 public financing mechanisms to promote energy efficiency in
the building sector.
• However, financing largely comes from public sector budgets
• 4.25T euro investment in energy efficiency required if EU to meet it
2050 80% GHG reduction target
• Public money should be used to leverage more private finance eg in
Germany 8.9b euro promotional loans attracted 21.5b euro private
sector investment
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Barriers constraining private investment
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Costs are incurred in front of a long payback period
Multi dwelling housing where communal decision making is complex
Labour market is not aware or skilled
Retrofit theory in its infancy
Building owners rarely make energy efficiency retrofit a priority, unless mandated
Few businesses have prioritised or have the capital available
Uncertainty of government actions
Property owners are hesitant because retrofit debt appears as debt on balance sheet
Retrofitting is not core business of building occupants
Financial markets lack data to inform whether energy efficiency retrofit can pay for itself
Banks lack standards for collateralising debt
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Policy levers
Governments have at their disposal a number of policy levers which, in
consultation with industry can guide the transition, providing consistency
and stability for private sector decision making and investment. These
measures include:
• building codes
• technical and product standards
• mandatory building labelling
• fiscal incentives
• tax reductions
• energy efficiency obligations and
• market mechanisms such as an emissions trading system (ILO 2011d).
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Effect of Recession on Retrofitting
Investments
• Investment has dropped in most countries
• Construction and real estate sectors experienced largest falls in economic
growth expectations
• Large amounts of spare residential capacity
• Little new construction or retrofitting
Optional view:
• Deeper retrofits lower risk of asset depreciation
• Portfolio approach to managing building stock helps owners increase cost
effectiveness of energy efficiency efforts
• The scale of investment determines the speed of retrofitting
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Section 2: Employment effect
• The constructed environment
• Global:
• 100m people
• Europe
• EUR 562b, 15m people
• 10% GDP
• Emissions profile
• 23% of CO2 emissions
• Older building stock has poor thermal performance and higher frequency of excess
cold
• UK: 70% existing stock still in use in 2050, 40% built before 1985
• Nearly half of all energy consumed in buildings could be avoided with new energy
efficient systems and equipment, yet retrofits are still not occurring in the scale
required (World Economic Forum 2011).
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Retrofitting programs in member states
• Tend to cover private households, but in some countries public and
industrial properties as well
• Belgium, Czech Republic, Germany, Estonia, France, Ireland, Italy,
Latvia, Lithuania, Hungary, Austria, Poland, Romania, Slovenia all have
building retrofitting in place
• Job creation may not be a primary aim, but the employment effects
are positive
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Czech
250k households
19,000 jobs pa
Austria
Thermal reconstitution
20,000 jobs
Belgium
Energy renewal
13,500 over 10 years
Germany
300,000 jobs pa
Slovakia
8,000 jobs pa
Hungary
EU energy efficiency action plan
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If deep renovation
130,000 by 2020
c/f sub optimal renovation
43,000 by 2020
Building sector
2 m jobs by 2020
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France; Grenelle Plan-Batiment
• Required that by 2012 all new buildings will be low power and by
2020 they will all be “positive energy”
• The plan includes progressively scaling up capacity to renovate
• 400,000 units in 2013 and
• 800,000 houses using the most energy by 2020 (ADEME 2011).
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Germany Building Retrofit Program
• Germany resolved to drive down energy consumption in buildings
through installation of insulation, installing modern heat diffusion
devices and installing technology to manage energy usage. Its target
was to:
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Renovate 300,000 apartments per year
Create/preserve 200,000 jobs
Reduce emissions by 2m tonnes per year
Reduce state debt $4b by reducing unemployment and increasing tax revenue
• The initiative also saw the development of new technologies, positive
effects were felt in towns and many new jobs were created (Syndex
2011).
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Germany Building Retrofit Program
(Year 2010)
• For every 1 euro of public funds on energy efficient construction and
refurbishment, federal government received 5 euro tax revenue
• 340,000 jobs created in the sector
• 1.8b euro saved in welfare payments
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UK Green Deal Programme
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• Improve energy efficiency in households and businesses at no up
front costs, paying back through future savings in energy bills
• Domestic building responsible for 25% of all emissions and 40% of its
final energy use. Over 75% of energy used in homes is for space and
water heating
• Retrofit 23m dwellings to acceptable standards of energy efficiency,
or “one building per minute to 2050” (DECC 2010)
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UK policy critique: Labour market impacts
• Issues not adequately addressed in UK policy
• ILO:
• governments must have policy to manage this situation
• Labour and skills policies are important
• Policy should focus on preserving employment, not jobs
• Workers and firms must be able to adapt quickly
• Gleeson:
• New occupational profiles
• New sources of labour required
• ILO UK country study:
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• OECD:
• No centralised national framework
• Skills and labour shortages acknowledged
• Generalised statements rather than specific measures
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Section 3: Labour market impact
• In respect of the construction sector it believed the new green jobs would be
performed by people who come from the industry and were retrained
(Eurofound 2011; Pauwels et.al. 2011)
• Skills gaps and shortages would be a “binding constraint” on the constructed
environment and that “the majority of architects and engineers worldwide are
unaware of the materials, design and construction techniques available for
energy efficient buildings and are therefore unable to put them into use in their
projects” (UNEP 2008, p. 19). While one suspects that reference is probably now
dated, the OECD (2011) suggests skill shortages are already a concern with
construction and retrofitting among the most effected sectors.
• ILO research attributes the problem to an underestimation of growth in the small
and medium enterprise sectors, the general lack of scientists and engineers,
national skills structures which don’t meet demand and the low reputation of
some occupations (Strietska-Ilina et.al. 2011).
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Transitioning the labour market (1)
Research 1 (ILO 2011):
• Skill shortages and new occupational profiles
• Green building value chain occupational clusters:
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Conceiving, planning, designing and advising: architects, consult engineers
Construction, installing, maintenance: specialist trades
Controlling :energy auditors, inspectors
Enabling: policy makers, urban planners
Manufacturing and distribution: manuf’s of green prod
Green building clients: developers, build managers
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Transitioning the labour market (2)
Research 2 (Freidl 2011): the green plumber
• New requirements: new products, technological developments,
understanding demanding customers, high level of flexibility,
specialised knowledge
• New competencies: customer orientation, ability to communicate and
decide, to consult and sell, planning competencies, a high level of
independence and global thinking
• Existing competencies: professional competencies and manual skills.
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Transitioning the labour market (3)
Research 3 (Gleeson et. al. 2011):
The retrofit construction team:
• competent emissions assessors, project managers and a supply chain capable of
delivering mass retrofitting.
• the project delivery for a retrofit delivering emission reductions will require a
workforce to:
• assess the emissions
• carry out the options appraisal
• project managers
• skilled labour
• monitor and report on final fuel emissions.
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All policy is not good policy
• Cool-biz (Horie 2009) initiative in Japan
• Increase office temperatures/reduce cooling
• Changes working times and traditional formal office dress
• Result
• Loss of worker productive capacity
• Stress and depression
• Australian Home Insulation Programme (Combet 2010)
• Insulate homes, train and employ low skilled workers
• Electrocutions, four fatalities and 100’s of house fires
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Key findings
• Efforts need to double to meet EU energy efficiency goals by 2020
• Regulatory uncertainty is a barrier to pursuing energy efficiency investments
• Up to 2.5m jobs (direct and indirect) could be created in the EU building sector by
2030
• Governments should leverage more private finance in their promotion of energy
efficiency in buildings
• Better energy efficiency performance data and putting a monetary valuation on
the co-benefits to energy efficiency is required to attract large investors
• A labour market plan is required
• Social partners need to be involved
• Transition should provide for decent work and a just transition
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